Category: Taxes

The recent lawsuit filed by the Health Republic Insurance Company of Oregon regarding ObamaCare’s “risk corridor” program raises the question: Does the federal government have a duty to defend the lawsuit? Could they confess that the plaintiffs are right, or, better still, settle the case for the face value? Nicholas Bagley of the University Of Michigan School Of Law does not think the feds will do that while they can still argue that the claims are unripe. But if the case gets past the initial procedural hurdles, they’ll be sorely tempted to cut a deal.

Leaders of some health cooperatives set up under the Affordable Care Act said it would be hard for the Obama administration to recoup more than $1 billion in federal loans made to some of the organizations that are now defunct, because most of the money has been spent.

A group representing existing co-ops, as well as leaders of some of the organizations, said there is little of the federal loan money remaining and some of what is left is needed to pay providers whose bills have yet to be paid. Obama administration officials have said they plan to use every available tool to recoup the federal loans, including legal action.

Thousands of doctors, hospitals and other providers in some states still haven’t been paid for health services they provided to members insured by the co-ops, which are organizations set up under the health law to offer health insurance to consumers and cut costs by giving established insurers more competition.

Health Republic Insurance Company of Oregon, a Lake Oswego-based insurer that is phasing down its operations, on Wednesday filed a $5 billion class action lawsuit on behalf of insurers it says were shorted by the federal government under an ObamaCare program.

The lawsuit, filed in the United States Court of Federal Claims, focuses on a program that was intended to offset insurer losses in the early years of the implementation of the Patient Protection and Affordable Care Act.

Instead, payments to insurers under the “risk corridor” program amounted to 12.6 percent of the amount expected for 2014, and are expected to be similarly low for 2015.

Federal law and regulations “are unequivocal about the payments the Government must make,” according to the lawsuit. “The law is clear: the Government must abide by its statutory obligations.”

A response to questions from Senator John Cornyn (R-TX) about federal spending on state-based ObamaCare exchanges reveals the improper spending of one million dollars in Arkansas. The states setting up their own exchanges have spent more than $3.2 billion in federal funds, and many of those states have presided over failed exchanges and have opted to have their citizens routed to the federal healthcare.gov ObamaCare exchange.

Responding to Sen. Cornyn, Centers of Medicare and Medicaid Services Acting Administration Andrew Slavitt wrote, “as part of CMS’s routine federal oversight of (exchanges), CMS found that the Arkansas SBM spent approximately $1 million of the state’s federal grant funding for activities that are not allowed under regulations.”

In a recent letter addressed to Senator John Cornyn (R-Texas), ObamaCare chief Andy Slavitt said the federal government will “recover its fair portion” of funds in the event a failed ObamaCare state exchange reaches a settlement with contractors.

Given that the federal government funded the overwhelming majority of state exchange projects with $5.5 billion in taxpayer funds, “fair portion” should be close to 100 percent.

Recently, Maryland reached a $45 million settlement with a contractor stemming from its state exchange debacle. But despite financing the Maryland exchange to the tune of nearly $200 million the federal government will receive only 70 percent of funds from the settlement.

Liberals have been claiming for decades that U.S. companies are at a disadvantage because they help finance health insurance for their workers while their competitors in nations with government-run health systems don’t bear those costs.

Instead of addressing the problem, ObamaCare made it worse.

The law mandated that U.S. firms provide their workers with health insurance or pay a fine of $2,000 to $3,000 per worker, and imposed significant regulatory compliance burdens on them.

The American Action Forum estimates that the Affordable Care Act has imposed costs of $50.1 billion in state and private-sector burdens and added 177.9 million annual paperwork hours.

The Congressional Budget Office estimates that the law will result in a reduction in work hours equivalent to the loss of two million jobs over the next decade.

According to the Kaiser Family Foundation (KFF), average premiums in the workplace were up 24 percent for individual plans and 27 percent for family plans. The vast majority of privately insured Americans – 9 out of 10 – purchase coverage through their employers.

Cost-sharing grew even faster. KFF reports that the average deductible for all workers was $1,077 in 2015, up from $646 in 2010—a 67 percent increase.

Over the past 5 years, a typical family of four faced 43 percent higher health costs, including both premiums and out-of-pocket expenses. The Milliman Medical Index also shows that employer costs increased by 32 percent, from $10,744 in 2010 to $14,198 in 2015. That’s nearly $3,500 that could have gone into paychecks if health costs had not soared.

Medicaid’s complex federal-state financing structure has long created perverse incentives that discourage efficient care. Key to the problem is the federal government’s uncapped reimbursement of state Medicaid expenditures, which encourages states to artificially inflate their Medicaid spending. Such schemes have significantly increased over the past several years and they likely add tens of billions in generally low-value Medicaid spending each year.

This study examines states’ use of accounting schemes to inflate federal Medicaid reimbursements. The study focuses on the largest of the current schemes, provider taxes. These are assessments states levy on healthcare providers, often accompanied by the explicit or implicit guarantee of increased Medicaid payments to those same providers, financed from the federal matching funds. The study provides an economic and political analysis of these taxes and other strategies that states have employed to maximize federal Medicaid reimbursements, and recommends reforms. It contains an appendix with a case study of Arizona, which shows how the state imposed provider taxes to pay for Medicaid expansion.

The Department of Health and Human Services announced Friday night that it was in the process of shorting the U.S. Treasury $3.5 billion.

Well, they didn’t exactly announce it. You had to read between the lines.

The theft of $3.5 billion will help prop up insurers that have agreed to sell ObamaCare policies in the individual market. Behind all the happy talk from Administration officials about the program’s success lies an unpleasant truth: insurers that participate in ObamaCare exchanges are bleeding money.

Those losses are coming despite billions of dollars in handouts the government is providing the industry. Some of those handouts are entirely lawful; others, not so much.